ATLANTIC CITY — The historic Madison House hotel features marble floors, chandeliers and an elegant staircase modeled after the one in Philadelphia’s Independence Hall.

This building and its stately Colonial Revival architecture would seem like an appealing choice for Atlantic City’s tourists, but the 80-year-old Madison remains closed to hotel guests.

There are doubts that it will ever reopen.

In its most recent incarnation, the 14-story building has served as a corporate office for Pinnacle Entertainment Inc., the Las Vegas-based gaming company that announced this month it has abandoned plans to build an Atlantic City casino.

“Obviously, there was a lot of disappointment here. It just wasn’t meant to be,” Pinnacle spokeswoman Pauline Yoshihashi said.

Pinnacle’s pullout from Atlantic City has left the Madison House in limbo. The hotel, close to the ocean at the southern end of Dr. Martin Luther King Jr. Boulevard, is one of the few remaining buildings in a neighborhood once dominated by the Sands Casino Hotel.

Pinnacle imploded the Sands in the fall of 2007 and demolished other buildings to make room for what was supposed to be a new $1.5 billion gaming resort. But Pinnacle now plans to sell its 20-acre development site, including where the Sands once stood, and say goodbye to Atlantic City.

However, Pinnacle’s departure has been complicated by a state Superior Court lawsuit that claims the company — while it still wanted to build its casino — deliberately allowed the Madison House to rot so Pinnacle could buy the hotel “on the cheap” and then demolish it.

Madison House Group, the hotel owner, alleges in the suit that Pinnacle is responsible for water damage, rust, stains on the walls and ceilings and possible mold contamination. The suit also contends that Pinnacle violated the terms of a lease that required the company to operate the Madison as a first-class hotel.

Yoshihashi declined to comment on the suit, citing corporate policy not to discuss pending litigation. Philip D. Neuer, a Newark attorney representing the Madison House Group, also declined to comment.

Pinnacle and the Madison House owners failed in negotiations for the hotel’s sale. Former Pinnacle Chairman Dan Lee said in a 2007 interview that the owners were asking $50 million for a property he believed was worth about $2.5 million.

When Pinnacle bought the Sands in 2006 for $270 million, it inherited a lease for the Madison House that requires it to pay $2 million annually through 2012. The Sands had used the adjacent Madison as a companion hotel for gamblers, but when the casino closed in 2006, so did the Madison.

For a time, Pinnacle wanted to use the Madison as housing for foreign students who come to Atlantic City to work in the casinos and other local businesses. Yoshihashi would not say whether any students are currently in the hotel. She declined a request by The Press of Atlantic City to tour the building.

Meanwhile, the Madison overlooks a sprawling dirt lot where the Sands once stood. The Madison is listed on the National Register of Historic Places, giving it protected status, but hardly an ironclad guarantee that it too won’t be demolished.


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